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Q2 Week in Review: How Facebook, Comcast, CBS, Google, Et Al, Really Fared

With dozens of companies in the media and tech sectors reporting earnings this week, it’s tough to keep up with it all. Here’s a highly opinionated round-up of which businesses looked hot (and not)….

Biggest Losers

1. TWITTER The slow-motion train wreck showed no sign of stopping with Twitter’s Q2 earnings. While the user-base total actually beat expectations, the slowing revenue growth is a really bad sign. Though the company seems to announce a new deal every day in the sports category for video, which is where the focus should be given how aggressive Facebook and Snapchat are getting there, there’s no visibility on how these pacts move the needle financially. It was also good of CEO Jack Dorsey to state that curbing user abuse is a priority, but there needs to be more action than talk; there is still no clear path forward, which isn’t great considering what a publicity nightmare episodes like the Leslie Jones affair become. At least Twitter shows signs of working hard on a turnaround given a new promotional push and “stickers” product this week, but the eventual sale of this company still seems a certainty.

2. REDBOX Parent company Outerwall sold to Apollo Management Group for $1.6 billion this week just ahead of the company’s 2Q earnings, which is good news: This once vibrant brand is in desperate need of new management. Yes, the kiosk business is in irreversible decline but there are still many years to go in which real value can be extracted. The Redbox brand is also still strong enough to give its long-delayed entry into streaming, as Variety exclusively reported, a shot. Maybe best to put a pin in its current plan so that the new owner can make sure there’s a sound strategy here, unlike its past joint-venture debacle with Verizon.

3. APPLE Not a good look to see a decline in iPhone sales for the second quarter in a row; bad timing considering Samsung is peaking right now on the mobile front. Profit and revenue are down as well. But on the bright side, Apple’s services business is growing beautifully, and Apple Music’s first-year rocket ride is a big reason why. Jaw-dropper of a move this week to strike a deal to add a new “Carpool Karaoke” TV series to the growing roster of video offerings to Apple Music, which raises the question of whether there’s a more ambitious move eventually in the offing that would make the likes of Netflix and Amazon get real nervous.

4. VERIZON Yahoo’s interminable search for a new owner yields the best possible scenario with the company most qualified to tee up a turnaround. Give Verizon credit for smooth handling; no second-guessing the price tag or fretting about regulatory approval was apparent. Marissa Mayer says she’ll stick around but…come on. Q2 focus on synergies was a nice distraction from an otherwise unspectacular quarter. Integrating Yahoo is going to be a bear but the company has already proved its ability to do that with AOL, so no skepticism there. No clarity on what will become of Yahoo’s content assets but Verizon is at least seen as a credible steward despite the fact its own track record with content isn’t really that much better.

5. NETFLIX Coming off a wobbly Q2 and a bombshell article in Variety detailing the $120 million cost and troubled production of upcoming series “The Get Down,” it’s either bold or foolish of chief creative officer Ted Sarandos to take the stage at TV Critics Asnn. press conference and strike an almost defiant tone with regard to spending aggressively and putting zero credence in any notion of “peak TV” market saturation. Then again, he’s clearly coming from a place of extreme confidence given the slew of renewals he announced this week. Most impressive of all, new series “Stranger Things” seems to be making the kind of surprise breakthrough “Making of a Murderer” achieved. Add another hit to the Netflix tally.

6. NINTENDO If you were hoping Pokemon Go was headed for fad status, the momentum of this phenomenon showed no signs of flagging in its its third week in the marketplace. How’s this for cultural cache: The CEOs at the biggest tech companies on the planet name-dropped the game on their earnings calls. But Nintendo itself looks like its exploitation of the craze won’t be fully realized in the short term, as a pre-earnings stock dip signaled that the impact of the game won’t be felt until next quarter. Many more IP extensions coming later this year as well mean this once moribund company is hot again but has to wait longer to cash in.

7. STARZ Revenues may have fallen short of Wall Street expectations but earnings and subscriber levels looked better. There’s another number Starz is going to have to provide soon now that its rivals HBO Now and Showtime have made their own disclosures: how many subs its streaming app has garnered. Interesting series pickup also made this week of Channel 4 comedy “Peep Show.” Nevertheless, let’s see what new acquirer Lionsgate has to say on its own call next week.

Biggest Winners

1. AMAZON When a company that was once seemingly allergic to profit posts multiple quarters of record net income, that’s a beautiful thing. But Amazon is going to need all that money because the company made some pretty bold statements regarding content investments, i.e. a plan to double spending on original programming in the second half of the year (tripling the volume of content). Timing of this aggressive tone was good considering rival Netflix has been talking a big game recently on this front. Announcement of an India expansion for Prime, including video, is going to need some of that spend, too.

2. FACEBOOK Somehow Facebook, Google and Amazon all had stunning quarters simultaneously; you’d assume the success of one might cannibalize the others. With so much intense competition from the likes of Snapchat, Facebook’s ability to keep its gargantuan 1.71 billion user base growing to record levels just defies belief. Good to see CEO Mark Zuckerberg continue to beat the drum on the importance of video to the platform, but it’s time to disclose some numbers so we can understand just how big Facebook Live is really getting, especially with small sums ($50 million) currently getting paid out to hundreds of content providers in hopes of an ecosystem taking root here.

3. GOOGLE Given how gangbusters rival Facebook is going these days, Google really needed a strong quarter after a ghastly Q1 miss, and boy did it deliver. CEO Sandur Pichar is even starting to sound a lot like Zuckerberg—lots of talk this month about the importance of mobile, video and even some livestreaming. But the biggest win may actually be on the decidedly non-Facebook category of hardware, given Chromecast has surpassed the 30 million sales mark. Roku and Apple are getting beaten in the connected-TV market. Not bad.

4. COMCAST Not a lot to find fault with over at Comcast. It wins even where it loses: The churn of 4,000 video subscribers is spectacular, especially compared to worse numbers at AT&T, Dish, Verizon and Netflix. Its movies did terribly during the quarter, but the company had no shot of matching last year’s “Jurassic World”-inflated period, anyway. NBCUniversal CEO Steve Burke, who just signed a big contract extension, talked up a great upfront, but the third quarter is going to be even better coming out of the Olympics. That is, unless, Rio becomes one giant sinkhole and collapses under the weight of its many problems.

5. CBS CORP. To those who wait with baited breath for CBS Corp. and Viacom to recombine, the subtext of CEO Leslie Moonves’ 2Q was: what the heck for? The purpose of taking on a long roster of cable networks seemed all the more questionable considering CBS already seems well on its way to the next era of the media business: OTT. For CBS All Access and Showtime to already be streaming to about 1 million subscribers apiece is remarkable considering that puts them on par–maybe even ahead–of HBO Go. And CBS All Access has barely gotten started. The “Star Trek” franchise keyed a huge syndication windfall via a Netflix deal, too. Back in ol’ terrestrial TV, Moonves talked a big game on upfront revenues, projecting a strong second half of the year to boot. Strong quarter all around, and keep an eye on that radio unit spinoff.

6. T-MOBILE This wireless biz keeps cruising along, which only seems to accelerate speculation that M&A is on the horizon; CEO John Legere is out there openly predicting a tech or cable company is going to come calling sooner or later. In stark contrast to the in-house content stockpiling going on at rivals AT&T and Verizon, T-Mobile is keeping its foot on the gas of a “zero rating” strategy that by now has virtually every brand participating. Legere has avoided regulatory action on this front so far, but the bigger he expands his Binge On initiative, the more you have to wonder whether a clash is inevitable.

7. SAMSUNG The successful rollout of Galaxy S7 powered Samsung to its most profitable quarter in two years. While the mobile division is doing the heavy lifting, the company got a new competitor this week in the TV-set business, with Chinese tech giant LeEco making good on its promise to enter the U.S. market by buying Vizio for $2 billion. The company is also slowly but quietly backing out of the content business, where its highest-ranking exec, John Pleasants, ducked out, as Variety exclusively reported.

 

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